(Alliance News) - Stocks in London are set to end the week on the back-foot - following the Asian session overnight - as record coronavirus cases in the US continues to dent investor sentiment.
In early UK corporate news, Great Portland Estate is struggling with rent collections, Gym Group and Restaurant Group plans for reopening are hitting full stride and Petropavlovsk fight for board control continues.
IG says futures indicate the FTSE 100 index of large-caps to open 11.32 points lower at 6,038.30 on Friday - at that price the benchmark is down 1.9% this week. The blue chip index closed down 106.54 points, or 1.7%, at 6,049.62 on Thursday.
"Stock markets in Europe were mixed for most of the session yesterday but selling pressure picked up towards the close of trading and the indices in the UK, France and Italy finished down more than 1%. The aggressive move to the downside in the last 30 minutes of trading in Europe was influenced by the US indices," CMC Markets market analyst David Madden commented.
In the US on Thursday, Wall Street ended in the red, with the Dow Jones Industrial Average losing 1.4%, the S&P 500 0.6%, but the tech-heaving Nasdaq Composite closed 0.5% higher.
Madden continued: "There is a growing feeling that things are going backwards in terms of the health emergency. Yesterday, it was reported that Tokyo posted a record number of new cases, while Hong Kong will retighten restrictions on account of the number of fresh cases.
"In the US, Alabama saw a record number of cases, while Florida posted a record number of hospitalisations and fatalities. Earlier in the week, the WHO said it wouldn't be surprised if the death rate increases as the infection rate has risen recently, but the fatality rate is still lagging behind. Traders will be paying close attention to the number of deaths, as that could be the tipping point for politicians to reverse the reopening of their economies."
The US on Thursday posted 65,551 new coronavirus cases, a record for a 24-hour period, according to a tally by Johns Hopkins University.
The country, the hardest-hit in the world by the pandemic, has a total caseload of more than 3.1 million, with 133,195 deaths.
The previous daily record was Tuesday, with more than 60,200 cases in one day. The US has seen a spike in infections in recent weeks, particularly in the south and west, and health experts worry the death rate may soon follow the same trajectory. According to the Johns Hopkins tracker at 0030 GMT Friday, 1,000 people died from Covid-19 in the US in the last 24 hours.
"We're in a very difficult, challenging period right now," top US infectious diseases expert Anthony Fauci said Thursday during a teleconference organised by news outlet The Hill.
US weekly jobless claims continued their gradual climb down, data from the Department of Labor showed on Thursday.
For the week to July 4, seasonally-adjusted initial claims were 1.31 million, down from 1.41 million the week before. Consensus had anticipated 1.38 million claims for the week to July 4.
The figures continue to be elevated due to the Covid-19 pandemic, but have declined gradually since a record weekly high of 6.9 million claims was set in late March. In February, claims were running around 210,000 a week.
Continuing claims, or seasonally-adjusted insured employment, fell to 18.1 million in the week to June 27 from 18.8 million the week prior.
In Asia on Friday, the Japanese Nikkei 225 index closed down 1.1%. In China, the Shanghai Composite is down 1.6%, while the Hang Seng index in Hong Kong is 2.1% lower.
AxiCorp's Stephen Innes commented: "Optimism is giving way de-risking into the weekend as there is no way to sugar-coat, let alone the Fed papering over the new daily Covid-19 cases hitting 60,000 in the US for the first time on Thursday."
"Even yesterday, there was a reluctance to take on risk despite the strong US cyclical rebound implied by consensus-beating activity data. Instead, equity and gold markets are taking their cue from the US Treasury market, where traders do not seem overly convinced that the V-shaped recovery will continue beyond the near term," Innes added.
In positive news in Asia, Japanese producer prices returned to monthly growth in June, data from the Bank of Japan showed.
In June, producer prices rose 0.6% after a 0.5% fall in May. The last time the producer price index posted a month-on-month gain was January, when prices rose 0.1%.
Annually, prices fell 1.6% in June, but this was slower than the 2.8% fall recorded for May and the 2.4% fall seen in April.
In London, midcap central London property investor Great Portland Estates said it has collected 69% of its quarterly rent owed in June, with monthly rent collected at 66%.
During the quarter to June 30, Great Portland Estates said it signed four new leases and renewals generating GBP4.3 million in annual rent, and noted its vacancy rate at the quarter-end stood at 3.3%.
Chief Executive Toby Courtauld said: "Whilst the lockdown has started to ease and our office pre-letting momentum remains healthy, Covid-19 is disrupting the activities of many of our existing occupiers, which in some instances is impacting their ability to meet their rental payments."
Courtauld said the firm is "well positioned" despite the "challenging" conditions.
"Our leverage is low providing strength in these difficult markets with significant capacity for growth should opportunities emerge; our portfolio is almost fully let and our extensive development pipeline is set to deliver high quality, sustainable spaces that remain in high demand; this, combined with the talents of our experienced team and strong culture, means that we have the ability to choose our path to deliver on all our ambitions," he added.
Gym Group confirmed it will be re-opening its 160 gyms in England on July 25, with its 13 sites in Scotland and Wales to follow "as soon a possible", when local restrictions are lifted.
UK Culture Secretary Oliver Dowden on Thursday allowed the reopening of swimming pools, gyms and outdoor arts performances in the latest easing of the coronavirus lockdown in England.
Gym Group said it saw a "significant" number of cancellations when gyms were forced to shut in mid-March, but as of Friday had 692,000 members, down from 870,000 at March 18.
The gym operator said its own research indicates 92% of its members are keen to return to the gym.
Petropavlovsk said it has received a requisition from 5% shareholder Everest Alliance to hold a general meeting over the removal of Peter Hambro, Alya Samokhvalova, Johnny Martin Smith, Martin Smith and Angelica Phillips from the company's board.
Everest Alliance is also hoping to appoint two new directors: Paul Adrian Bushell and Ivan Kulakov.
This comes as the latest in a fight for control of the company after Petropavlovsk last week Tuesday announced the election of a new chair, chief executive and two directors, but said it believed the voting process at its annual general meeting to appoint the new board members was skewed.
Restaurant Group said it has agreed GBP50 million from the UK government's CLBILS scheme. The deal has added GBP10 million to the company's overall debt facilities.
The restaurant operator has also now started a phased reopening of its restaurants and pubs for eat-in trade in line with government guidance.
Restaurant Group's current reopening plans will see 25% of its restaurants open by the end of July, 60% reopened by the end of August and 90% by the end of September.
The company noted the remaining 10% is not expected to open in 2020 reflecting locations where footfall is anticipated to remain "considerably weak".
Aerospace & defence component manufacturer Senior said its trading activity in the second quarter was "significantly slowed" across both its Aerospace and Flexonics divisions, as customers temporarily closed their facilities and lowered production rates.
As a result, Senior is guiding for its first half revenue to be down 30% year on year, and margins to be "significantly" lower.
Despite this, the company noted its underlying cash performance has been "robust", with net cash inflow during the quarter of GBP3 million.
Net debt at the end of June is expected to be around GBP239 million, with GBP162 million of headroom.
In an attempt to reduce costs, Senior has embarked on a restructuring process which has seen the company lay off 12% of its workforce during the first half, with about 19% of staff currently furloughed.
A one-off charge of GBP35 million is expected, but Senior hopes to save GBP35 million from the restructuring.
"Whilst we expect that the structural long-term drivers of our end markets will remain in place, trading for the rest of 2020 continues to be impacted by Covid-19. As a result, guidance for 2020 remains suspended," Senior added.
Safe haven asset gold was quoted at USD1,796.60 an ounce early Friday, down on USD1,802.2 an ounce at the London equities close Thursday, retreating from multi-year highs reached during the week.
Brent oil was trading at USD41.72 a barrel early Friday, lower than USD42.33 late Thursday.
CMC Markets' Madden said: "The US dollar saw a lot of volatility yesterday. At the start of the session, the dollar index fell to its lowest level in over three weeks. When stocks started to sell off in the afternoon, it rallied as traders sought it out for as it has been a popular safe-haven play recently."
Sterling was quoted at USD1.2581 early Friday, down on USD1.2615 at the London equities close on Thursday.
The euro traded at USD1.1263 early Friday, down from USD1.1297 late Thursday. Against the yen, the dollar was quoted at JPY106.89 versus JPY107.27.
The economic events calendar on Friday has US producer prices and Canada unemployment data at 1330 BST.
By Paul McGowan; paulmcgowan@alliancenews.com
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